How Connected Cars Have Established A New Ecosystem Powered By IoT

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Editor’s note:Jahangir Mohammed is founder and CEO ofJasper, the cloud-based software platform that powers the Internet of Things.

Not long ago, after you bought a new vehicle, the manufacturer had very little contact with you for years until it was time to sell you another car. The Internet of Things is changing all that. The IoT-enabled “connected car” turns the vehicle itself into a hub for an entire ecosystem of connected services that offer consumers a wealth of benefits including enhanced safety and security, a richer user experience and a new suite of product offerings. From the manufacturer’s perspective, this also helps establish an ongoing customer relationship as well as incremental revenue streams over the life of the vehicle.

Across the world, 23 million cars on the road today are connected to the Internet, and that figure is expected to increase to 152 million. Historically, GM vehicles have been a hub for additional services, like its OnStar safety and security services. And in this past year, new vehicles in the U.S. are now equipped with 4G LTE mobile hotspots, with even more services promised in the future.

More vehicle manufacturers are jumping on board, as well, adding value-added connected IoT services to more new vehicles. Let’s take a look at some of these new connected car services and how IoT is providing the foundation on which this ecosystem is built.

Mobile hotspot

Gone are the days when being in the car meant you had to be disconnected. Many of today’s vehicle manufacturers are introducing in-vehicle mobile hotspot capabilities, giving both driver and passengers the ability to stay connected while on the road. In addition to GM, Audi equips its vehicles with Gemalto enabled mobile hotspot services through its Audi Connect service and Ford’s new Sync 3, powered by BlackBerry’s QNX, is included in more than 30 million vehicles spanning 250 models.

Because vehicle manufacturers are leveraging IoT platforms that enable connectivity via a network of mobile operators, passengers can connect their laptops, smartphones and tablets to the car to surf the Internet, watch movies and access social media. And for drivers, they’re loyal to the manufacturers who enable them to enjoy the benefits of this new in-car experience increases.

Over-the-air updates

Over-the-air (OTA) software updates in cars are very similar to the software updates that occur in smartphones. Any software update for a vehicle’s connected services is done wirelessly OTA, keeping the OEM in contact with the vehicle but removing the need for a dealership visit.

This matters because in the past year alone, over 60 million cars were recalled in the U.S., many attributed to software glitches. The cost – and burden – that recalls place on the driver and the vehicle manufacturer can be severe.

Many manufacturers are making strides to increase OTA offerings. Thanks to Gemalto, Audi provides features such as parking and gas prices using OTA updates on its Audi Connect solution, while GM has been offering OTA updates to its Bluetooth platform using the OnStar embedded connectivity platform. OTA updates are slowly becoming an industry standard – Chrysler Uconnect, Mercedes-Benz mbrace, BMW ConnectedDrive and the Toyota Entune systems regularly send firmware OTA updates to fix software glitches in their vehicles.

Infotainment

Sure, cars have been enabling us to connect our devices via Bluetooth to make calls and navigate – but what about the ability to use your favorite streaming apps to get the content you love without having to fiddle with your phone while driving and consuming valuable data plans? By leveraging the always-on connectivity that IoT provides, today’s connected car manufacturers are providing an entirely new interface for delivering and interacting with streaming content services like Spotify or Pandora.

IoT platforms also provide an easy way for content providers to monetize their services and optimize them for the connected car environment. Vehicle manufacturers, premium content providers, and even brick-and-mortar retailers can use IoT to give car owners a free trial of their services or other offers. OnStar’s new AtYourService feature brings commerce directly to the car, connecting retailers to drivers while they’re on the road. Online coupon services like RetailMeNot and Entertainment Book can deliver shopping coupons to the car’s dashboard for retailers located in the driver’s direction.

And IoT isn’t just about getting the service to the car – it also enables providers to track usage (or non-usage) patterns, prompt drivers to try new features, top up a diminishing data allotment or upgrade the service when the time is right. IoT has become the strategic platform to help deliver and monetize these services.

Safety and security

Safety and security remain the most important aspects of any vehicle. And with today’s connected cars, IoT enables the vehicle to continue to fulfill that role even after an accident has occurred. For example, IoT empowers pre-installed services like Volkswagen’s Car-Net with 24/7 automatic crash notification, which can automatically alert emergency services when an accident has occurred.

These possibly life-saving features are wholly dependent on reliable, low-latency connectivity, because a delay in notification (and the resulting delay in medical response) can literally mean the difference between life or death.

Usage-based insurance

Another emerging value-added service enabled by IoT is usage-based insurance (UBI), which tracks a driver’s behavior to establish a personalized insurance rate plan for each driver. Whereas insurance providers were previously limited to providing rates based on general factors like age, average mileage, accident and history, IoT provides a myriad of opportunities for customization.

For example, Allstate’s Drivewise program uses a small device deployed in your vehicle to collect information about your driving style. Data points collected include speed, brake activity and the time of day you drive. By collecting this data, Allstate can customize rates for each driver, incentivizing safe driving behavior and reducing premiums. Allstate has also partnered with Airbiquity, a provider of connected vehicle services, to further develop the insurer’s Roadside Assistance program offerings that leverage driving data.

A number of startups are building off this idea of collecting driver data. Commercial plug-in modules like those from start-up Mojio connect cars to the cloud via embedded radio links and upload hundreds of data points about the car every minute, tracking everything from the brakes to the locks. It then uses these data points to provide connected car services in partnership with apps like Concur to measure gas mileage and Glympse for GPS tracking.

A new business model

IoT is turning the vehicle into a powerful hub, enabling developers, manufacturers and service providers to offer value-added services and effectively changing their relationship with customers.

Connected services strengthen the vehicle manufacturers’ relationships with their customers and enhance brand loyalty – all while developing new and ongoing revenue streams throughout the life of the vehicle. Manufacturers can monitor customers’ experiences in real-time and on the road, enhance product quality, and investigate potential post-sale opportunities. And in turn, service providers are encouraged to explore an open platform for the production of apps that bring innovation to drivers and their passengers.

Armed with the power of IoT, vehicle manufacturers are on the leading edge of evolving user experiences and new business models based on IoT services. It’s no longer about a one-time product sale – it’s about creating an ecosystem wherein they can deliver and monetize services on an ongoing basis.

The connected car industry’s successes have been a guiding light for many other markets as we see businesses everywhere embrace the evolution from a product company to an IoT services company.

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